WrapManager's Wealth Management Blog
When life changes, we can help you thoughtfully respond.

Can You Improve Returns by Checking Your Investment Portfolio Less?

Posted by Doug Hutchinson | CFA®, Director of Research and Trading
July 6, 2016

Can_You_Improve_Returns_by_Checking_Your_Investment_Portfolio_Less.pngMaybe! Recent research from Columbia Business School suggests that it’s possible. Researchers found that checking an investment or retirement portfolio too frequently could result in lower returns.* That’s because investors who are overly driven by day-to-day fluctuations will often feel more emotionally compelled to make changes, which may ultimately veer them off course. The study cited that investors making decisions too often may “rebalance their holdings to get out of stocks that are dropping and miss out when they go back up.”

In light of the recent events in Britain and the volatility that has ensued, this study caught our interest. Perhaps it’s a good time to take pause and examine your train of thought in response to the news. Were you thinking of making a significant change in your portfolio? 

We have a few timely resources up on our website from J.P.Morgan, Cambiar Investors, and Federated Investors. All of them cite the uncertainty and volatility ahead for Britain, but also suggest that the global economy should be able to mitigate the impact. The overarching message is that long-term investors stay the course, and we tend to agree with their research. 

Which brings us back to this intriguing Columbia Business School study. The report also suggests that it’s better to let the market go through its ups and downs naturally, without trying to time entry and exit points on a frequent basis. Letting the market do the work over the long-term can often prove to be an effective solution for many investors, helping them avoid the negative impact that frequent decision-making can have on their long-term financial prospects.

Conduct a Trial Run of Checking Your Portfolio Less

How often you check your portfolio is your prerogative. But if you get the feeling that you spend too much time fighting the temptation to make changes to your long-term plan because of events in the news, then maybe it could help to experiment with checking your portfolio less. If you are the type to check daily, maybe you could spend a few months just checking your portfolio once a week. Or if you check once a week, maybe you push it to once a month. It’s worth a try!

At WrapManager, we believe checking-in with our clients at a minimum of quarterly to review the portfolio together and to make sure the investment plan we have in place is up to date. We believe that for a long-term investor, reviewing the portfolio quarterly is appropriate for making sure the plan stays on track. If you’d like to get a glimpse of how we review the markets and portfolios with our clients, feel welcome to give us a call to discuss it further at 1-800-541-7774.

A guide to finding a better financial advisor



*Source: ThinkAdvisor


Retirement Income Strategy Portfolio Strategy